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Bulls and Bears, Oh My!

Ever wonder what the terms "bull" and "bear" mean, in relation to the stock market? Wonder no more.

An investor "bullish" on a particular stock or the market is one who expects it to go up. Conversely, a "bear" is more pessimistic, perhaps expecting a market drop in the near future. We Fools won't guess what the market will do in the short term, but we're long-term bulls. Over many decades, stocks have returned an average of almost 11% per year -- and that's despite market crashes, world wars, the Great Depression, and the disco years.

A proverb that has been in use at least since the 17th century points out that it is not wise "to sell the bear's skin before one has caught the bear." By the 18th century the term "bear-skin," apparently from this proverb, was being used in the phrase "to sell the bear-skin" or "to buy the bear-skin." The "bear-skin" element was shortened to "bear," and "bear" was then applied to stock that was being sold by a speculator.

In 1720, England was rocked by a scandal known as the South Sea Bubble. This was a protracted scheme involving the South Sea Company. The term "bear," meaning the person who sells stock in expectation of a price decline, as well as the stock so sold, had been in use prior to the breaking of the South Sea Bubble. However, since this type of selling was used by many people involved in the scandal, the South Sea affair brought "bear" into widespread use.

It appears that once the bear metaphor was established, bulls were chosen as suitable counterpoints, since the two have been associated in folklore for centuries. (By the way, the South Sea Company scandal is also the origins of the phrase "going south.")

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Selena Maranjian has been writing for the Fool since 1996 and covers basic investing and personal finance topics. She also prepares the Fool's syndicated newspaper column and has written or co-written a number of Fool books. For more financial and non-financial fare (as well as silly things), follow her on Twitter... Follow @SelenaMaranjian